The SpaceX Sham - Dissent Magazine

Summer 2026

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On June 12, SpaceX went public at a valuation of $1.75 trillion, the largest IPO in history, minting Elon Musk into the world’s first trillionaire, at least for a few weeks. The company occupies a legitimate market niche as a private spaceflight vendor for NASA and as a global satellite-based internet services provider through Starlink. But its future value hinges on the ostensibly stratospheric growth potential of Musk’s other venture, xAI, which combines X (formerly Twitter) and Grok (the preternaturally bigoted, deepfake-producing large language model).

Musk merged SpaceX and xAI earlier this year before he took SpaceX public―not just to build data centers in space and to set up a colony on Mars with a million inhabitants, but to employ SpaceX’s fundraising potential to funnel capital into xAI’s increasingly expensive ambitions. Unlike just a year ago, SpaceX is now an AI company. Nearly 80 percent of its predicted $28 trillion total available market is tied to a hypothetical market for AI enterprise services.

Even without xAI tacked on, the company would be unprofitable. And yet, despite the various risk disclosures peppering Musk’s prospectus―including dry statements explaining that several “anticipated market opportunities” such as space tourism and human augmentation “do not currently exist”―the investment community at large bent over backward to get a piece of SpaceX stock. People wanted in, and badly. The IPO was a mass delusion event of astronomical proportions.

Although SpaceX stock has since fallen far below its IPO price, market behavior in recent weeks proves that the disclosures and the alarm bells were immaterial when there was money to be made on the way up. This latest naked demonstration of irrationality represents a sharp rebuke to the many progressives and consumer advocates who have long argued that corporate transparency and risk disclosure will bring market irrationality to heel, protect Americans from white-collar corruption, and democratize an inegalitarian financial system. The way markets contorted around the SpaceX IPO should put paid to these notions. Rather than be disciplined by the public markets, Musk bent them to his will. And we’re all caught up in it.

Even the most transparent markets will not govern themselves. Democratizing finance means taking aim at Big Tech’s oligarchic control over the economy, not giving them a level playing field.

The volumes of capital involved in the AI boom that is currently buoying xAI are truly immense. But, volume aside, this sector has the same financial building blocks as any other―including the ones that might give people pause, like off-balance-sheet special purpose vehicles designed to offload risk and private credit lenders who don’t often disclose asset performance. Arrangements like these are used throughout the financial system to speed along the development of all sorts of projects. But the fundamental opacity of these financial structures―how they shift risks without disclosing them―offends our sense of moral economy.

In most of my conversations with congressional staffers, community advocates, antitrust lawyers, and journalists (much of which followed from my work at the Center for Public Enterprise), people were as worried about the AI boom’s lack of financial transparency as they were about the sector’s structural unprofitability and the way that hyperscaler tech giants are reshaping our economy. AI makes no money, and its risks are being squirreled away into the financial system? Do the broligarchs have something to hide? Americans smell a rat.

Nowhere is this anxiety about hidden risks and investments that are too good to be true more prevalent than in the debates about private credit, the catch-all term for the gaggle of non-bank lending institutions that originate and trade billions of dollars of loans without supervision by the Federal Reserve. (Many Americans previously encountered private credit as “shadow banks” in the hangover of the Great Recession.) Private credit lenders, such as Blackstone, Apollo, KKR, and Blue Owl, are large and important investors: They take capital from institutional investors like pension funds, insurance companies, and asset managers and provide it to borrowers across the economy. Where the AI boom is concerned, it’s sometimes hard to tell just how much they’ve lent to the tech giants and on what terms. But we do know that when Musk’s xAI was still separate from SpaceX, it arranged for an off-balance-sheet subsidiary to borrow billions from private credit fund manager Apollo to purchase graphics processing units (GPUs) for data centers.

Last fall and early this year, jitters in the AI market and the failure of a few high-profile private lending transactions drew significant media attention to the performance of private...